A Buyer's Guide To A Happy Investme

A Buyer’s Guide

To A Happy Investmentã

Fifth Edition

Copyright 1987, 1993, 1999, 2004, 2006

By

Eldon M. Gossett

A Buyer’s Guide

To A Happy Investment

All customers have the right to expect a pleasant and uneventful buying experience. Many of our customers come from out of state and do not understand the area or the unique requirements for rural living.

As representatives of Coldwell Banker, we believe it is our responsibility to identify local real estate practices and expectations.

The purpose of this program is to share our knowledge and experience and to guide our customers through a pleasant and profitable buying experience.

Thank you for choosing the services of RE/MAX Coast and Country Real Estate and allowing us to assist you in finding the property you wish to purchase. We hope that the guidance provided in this brochure and the other services offered by RE/MAX Coast and Country result in making your purchase as enjoyable as possible.

SERVICES

Home Warranty Program

Protect your investment. Your new home is a large investment. You have planned for a long time and finally found the home you want. Why take chances?

Our Home Protection Plan protects you from major repair or replacement bills caused by unexpected appliance failures for one full year after closing.

You never pay more than a modest deductible. Ask the Real Estate Broker working with you for a list of those items included in the insurance plan.

Mortgage Loans

Most homebuyers feel that leverage is the key to investing. A home mortgage is then the logical way to purchase a new home. With mortgage rates low, a home loan makes good sense.

At RE/MAX Coast and Country, we have a number of great Lending suggestions that will help you through the process of financing your next Real Estate Investment.

Competent, Professional Staff

In today’s competitive Real Estate world, we recognize that customer satisfaction is vital to the overall success of our company. Excellent service is remembered by our customers and prompts them to use our services in the future. Customer service and satisfaction are two of the many concepts that distinguish RE/MAX Coast and Country from our competition.

Customer satisfaction is a result of many things: an attitude of enthusiasm and helpfulness; going the “extra mile” to satisfy a customer’s needs, and service that shows the customer that RE/MAX Associates are professionals who really care.

NOTICE TO

PROSPECTIVE

REAL ESTATE BUYERS

As a prospective purchaser, you should know that:

·A real estate Broker, other than the seller’s Broker, can agree with the buyer to represent the buyer exclusively.

·Provide information about available properties and sources of financing.

·Show properties and describe their attributes and amenities in detail.

·Assist in preparing and submitting an offer to purchase.

·Respond honestly and accurately to questions concerning the property.

·Disclose material facts the Broker knows or reasonably should know about the property.

·Offer the property without regard to race, creed, sex, religion or national origin.

A real estate Broker in a dual agency transaction (property to be purchased is listed with the same Broker) has an equal and affirmative obligation to both the buyer and the seller and cannot represent any purchase price other than the listing price or divulge any state of mind or financial state of the seller without the seller’s consent. Nor can the Broker disclose to the seller any price that a buyer might pay for the property or any other information that the buyer deems confidential.

Be sure to review the Agency Disclosure form with your Broker. In Oregon, it’s the law.

Should you choose to hire a real estate Broker to represent you as a buyer’s Broker, you should:

·Enter into a written employment contract that clearly establishes the obligations of both parties.

·Specify how and when the Broker will be compensated.

If you have any questions regarding the role and responsibilities of the real estate Brokers, please do not hesitate to ask.

BUYER’S CHECKLIST

A.Land Considerations

·Is the building site a natural geological land surface or is it the result of fill? If the latter, who did the filling, with what material and when?

·Is the building site in a natural watershed or marsh area? Does it appear that the neighbors may be using the property as a man-made watershed? Are you comfortable that you understand the water flow and drainage on and around the property?

·Look for water or silt marks on piers under the house.

·Are there indications of erosion, slippage, or serpentine soil? If so, are you prepared to deal with it? Ways of dealing with it include hiring a soils engineer or geologist to inspect the property and to provide you with a written report.

·Ocean, riverfront and hillside properties must have a geological report before the city/county building inspector will issue a building permit.

·If the home or property is at or near river level, you should determine where the home or building site is in relation to the flood plain. This can be obtained from the County Building Inspector. Being in the flood plain does not necessarily preclude building, but can significantly affect the design of the home.

·If the property is shown in a hazard area on the state hazard maps, you should consult with the Curry County Planning Department and an engineer or geologist. All steep slopes and sea cliffs should be checked for geological hazards as well as all river and oceanfront shorelines.

·Flood plain and hazard maps produced by the Department of Geology and FEMA are available for review at the Curry County Planning Department in Gold Beach. It is always wise to ask the Planning Department about the property and the area being considered for purchase.

·Do you know and understand all easements that are on the property you are purchasing? Most easements are for utilities and rights-of-way and will be specified in the preliminary title report. If any can be removed because they no longer apply, is the seller willing to remove them?

·Is there deeded access to the property? Do you know the width of the easement? Who maintains common roads or easement? Is it spelled out in writing or is it a gentlemen’s agreement?

·Do you understand the uses that the county/city will allow on the land you are purchasing? It is YOUR responsibility to confirm what can be done with the property. For example, if you intend to run a home business from the property, you need to check with the city or county planner to see if it is permissible. If the property is zoned forest/grazing or in a hazard area, you will need conditional use permits to build. If you plan to build a house, you must check with the planning department to confirm that the zoning will allow for siting of a house.

B.Boundaries

·Are the corners of the property marked? If marked, did the owner or a survey team mark them? Do the corner markings agree with the legal description of the property? Most property corners can be located by the buyer with a copy of the property description, a compass, and a 100-foot measuring tape. Specify a corner search or a survey if there are any doubts.

C.Utilities

·Where is the closest electrical hookup? Do you know the cost to run power to: (a) your property line, and (b) to your building site?

We strongly suggest that Coos Curry Electric Co-op be contacted if the property in which you are interested is bare land.

D.Water Considerations

·Is the property served by a municipal water system or does it have its own drilled well or stream reservoir? If the property is served by a municipal water district, are there assessments owing for the water installation?

·If the property is served by a well or stream, the seller should identify the location of the source, provide the operating instructions for the system and warrant access to the water source if it is not on the property. Buyer should determine that there is a minimum of 100 feet between the source of water and the septic tank and leach field.

·If the property is served by a drilled well, the seller must provide a well I.D. number. If the well is in a stream or a spring, the seller should have a permit or a water right. A permit to divert water from a stream or spring is required by Oregon law.

·Is the seller willing to warrant that the water source has been adequate for normal household use? Normal household use usually includes daily showers and laundry requirements for a family of four, plus seasonal gardening irrigation. The size of the family buying compared to the size of the family selling is an important consideration. An older couple selling may have never experienced a water shortage whereas a young family with children may experience a water shortage the first day. A GPM flow test may be advisable.

·The presence of iron in drinking water is common in wells and springs in different locations around the county.Buyer should have the well water tested for contaminates and minerals. The presence of high iron rates can cause yellowed clothes and discolor bathtubs, sinks and toilets. Always lift the toilet tank cover and look for contamination.

·If the source of water comes from a drilled well, the seller is required by law to provide a water potability and a nitrate test. The flow of water can be low and still function adequately with properly designed storage.

·If there is no defined water source to the property, is your offer to purchase contingent upon your well driller successfully drilling a well that will produce a reasonable amount of water?

·Only three households are permitted to obtain water from a single well or reservoir. If the water system is used by more than three households and less than 15, the system must be registered with D.E.Q. and comply with a program for inspection and testing.

E.Home Considerations

·Has the seller obtained building permits for all structures? Additions? Has a Notice of Completion been filed?

·Will the seller warrant that the property is connected to city sewer and does the city or sewer district agree? Are all assessments paid?

·If a pumping station is required, is it functioning properly? Many homes along the ocean and river front require private pumping stations to pump sewage from the house up to the city’s main sewer line.

·If a wood stove is installed in the home, will the seller warrant that the stove is in compliance with existing city/county building regulations?

You should plan to have your insurance agent inspect the home and particularly the wood stove or fireplace as quickly as possible. Repairs, if required, should be negotiated with the seller.

Not all fireplaces work efficiently. Many are only orna­mental. If the home has a fireplace and it is an important feature to you, ask for a demonstration.

·Does the seller have any warranties on the home such as roofing and appliances?

·If the home is connected to a septic system, will the seller warrant that the septic tank and leaching fields are in conformance with county regulations, show the location of the septic tank and leach lines, and provide the date the septic tank was last inspected and pumped? If the seller has no records, you should plan to have the seller have the septic tank inspected and pumped, if required, before closing. Make sure that the leach fields are tested for flow.

F.Buyer’s Inspections

We find buyers will spend more time and money inspecting a $3,000 used car than a $250,000 home. Knowing this, we try to encourage all buyers to accomplish a detailed and thorough whole-house inspection before making a final commitment to purchase. We strongly recommend structural, roof and whole house inspections by licensed contractors.

Siding is an important issue when buying a home. The use of siding manufactured by Louisiana Pacific and other companies became very popular about 15 years ago. Over time, many products proved to have been defective or incorrectly installed and have had to be replaced. Your contract to purchase should include a Manufactured Siding Disclosure by the seller. If there are any questions or doubts about the condition of the siding, a contractor should be hired to inspect it.

Pest inspections are not mandatory in Oregon. Be prepared to order and pay for a termite and dry rot inspection of the home, especially if it’s over four years old. Be prepared also to hire a contractor to give you an estimate for cost of repairs if the reports show evidence of damage.

Spending a small sum of money on inspections before you buy will help you negotiate the costs of repairs with the seller.

G.Environmental Issues

Mold is the result of dampness. Dampness occurs when there is poor ventilation. Seeing mold does not mean it is alive and growing. It can be dead and in a state of dry powder. If the mold is alive there is normally an odor of mold. If mold is suspected a mold inspection is recommended. Chemicals exist that kill mold and can be used by the professional pest exterminator. Mold can be corrected by making sure the area is dry and there is adequate ventilation. A dehumidifier can be used to eliminate the odor of mold but the source of the problem must be corrected.

Lead-based Paint was commonly used in houses prior to 1978. Lead-based paint that is in good condition is usually not hazardous.

Peeling, chipping, chalking or cracking lead-based paint is a hazard and needs attention. Where little children are concerned, windowsills, doors, doorframes, stairs, banisters, porches and railings are critical.

The Environmental Protection Agency has published information brochures for the benefit of buyers of houses built before 1978. You should ask for a copy of the brochure. Also, your contract to purchase should include a lead-based paint disclosure by the seller.

Asbestos was a common fiber used in different building materials prior to 1978. It can exist in siding, floor coverings, popcorn-type ceilings and insulation around pipes and heat shields.

As with lead-based paint, not disturbing the asbestos is probably the best one can do. Application of an undercoat of Kilz and a coat of good interior paint will seal the surface and prevent particles from flaking off.

Radon: To our knowledge, there have been no reports of radon in Curry County. Curry County is located in Zone 3 which indicates that radon is at its lowest level. Radon can only contaminate the air if there is no circulation. Homes with basements are the most susceptible to radon. Homes on slabs would be second. The Oregon Health Division can provide a list of companies that sell radon kits for testing.

Wetlands: Not all wetlands have been designated and won’t be until there is a requirement to meet the tests. Wetlands become an issue when a developer starts a development. If the intended use of the land subjects the land to testing, then the land should be tested before it is purchased.

If wetlands exist, there are usually a number of indicators such as type of soil, presence of water, Nile grass, skunk grass and often a rare lily or iris will be growing in the area. If you suspect wetlands, you should check with our local planning department for further instructions.

Underground Storage Tanks: While very few residential properties, even in rural areas, have ever had underground storage tanks for fuel oil or petroleum storage, almost all mill sites have had and continue to have buried tanks.

Buyers should examine all mill sites if one ever existed on the property being purchased. If there is reason to believe an old mill might have been on the property, we suggest consulting the county planner and the assessor’s office for information about the area.

When purchasing commercial property, particularly for development, we advise making an environmental audit or survey including past ownership, uses of the property and physical inspections for contamination.

We suggest that the audit begin at the assessor’s office where some history of the property might be available.

H.Manufactured Homes

Most manufactured homes in Curry County are taxed as personal property and not real property. If you own land with a manufactured home, you are likely to receive two tax statements, one for the land and improvements, such as a deck and garage, and one for the manufactured home itself. Application can be made to exempt a manufactured home from registration and titling through the DMV. Completing the procedure changes the manufactured home tax status from personal property to real property.

Vesting is also an important consideration when purchasing a manufactured home on land since the land is real property and the home may be personal property. The difference could affect rights of survivorship and inheritance. As a buyer, you should talk to an attorney about ownership.

The manufacturing date of a manufactured home is usually not the selling date and therefore an age disparity between the registered date and the manufactured date sometimes exists. A home manufactured in 1988 may have been sold and installed on the property in 1989. The registration date is more apt to show 1989, while the date on the frame will be 1988.

Like houses, manufactured homes have defects based upon the materials and specifications used at the time of manufacturing that proved to be unacceptable or faulty over time. Examples are aluminum wiring, polybutylene plumbing, man-made siding, and formaldehyde, which is a substance found in materials using glue. Many models of manufactured homes are delivered with a disclaimer regarding formaldehyde. Any questions regarding the materials used in a manufactured home should be directed to the manufacturer or a whole house inspector who can identify material problems.

Formaldehyde and aluminum wire were two major problems in older manufactured homes. The presence of formaldehyde used in the manufacturing of interior paneling, cabinets and carpet, coupled with the tightness of construction, can make some individuals very uncomfortable and can be an irritant to skin and eyes.

The best test for formaldehyde is to close the house completely for 2 to 3 days and then enter during the hottest part of the day. If your eyes burn or itch, it’s probably due to the presence of formaldehyde.

Improper installation of aluminum wiring has resulted in the loss of some older manufactured homes due to fire. The use of aluminum wiring as a conductor is satisfactory. The problem was in the tightness of the screws securing the wires. Over-tightening results in the flow of the metal away from the pressure points, leaving the connections loose and arcing. If aluminum wiring is present, all connections should be inspected for proper tightness and arcing. The use of aluminum wiring was stopped in the late 1970s by federal regulations.

Polybutylene tubing and fittings have also been a problem in a large number of manufactured homes over the past 20 years resulting in leaking water fittings. Leaking fittings may exist inside or underneath the home. Claims can be filed with the manufacturer of the tubing; however, there is a cut off due to the age of the home. You should rely on your home inspector or hire a plumbing contractor to advise you if the correct tubing and fittings are installed.

Class action suits have also been filed against certain manufacturers of siding used on manufactured homes. Buyers of manufactured homes should contact the home manufacturer before closing and ask about the materials used in construction at the time the home was built. Either the home manufacturer or your inspector should be able to identify faulty siding and advise the procedure you need to follow in order to file a claim.

The city and county have ordinances for the siting and installation of manufactured homes that buyers should review with the building inspectors. Homes previously installed on private land may or may not be installed on full foundations or may or may not be installed with tie-down straps. Your inspector should advise the method used to secure the home to the ground.

In order for a manufactured home to receive similar financing considerations as a house, it must be on a foundation; otherwise the age of the manufactured home becomes a major factor when trying to obtain a bank or institutional loan. Buyers of manufactured homes should contact their lender regarding financing and future sales. The age of the manufactured home is an important factor in financing.

I.Financial Considerations

If the seller, rather than a lending institution, finances your purchase via a promissory note and TRUST DEED, we recommend that you insist on a Collection Escrow Account. The bank or escrow company will then receive your monthly payments, maintain accurate financial records and, most importantly, have a signed Deed of Reconveyance to the property in their possession.

Upon full payment of the loan, they will give you the signed Deed of Reconveyance. You will need to record the Deed of Reconveyance to prove to the world that you now own the property free and clear.

If you make payments directly to the seller, there can be a difference of opinion as to the exact amount owing, plus you may have trouble locating the seller when you have paid the entire loan balance.

Normally, the seller and buyer share the cost of set-up fees of the Collection Escrow Account (approximately $150), and the seller pays the monthly collection fee.

If you use a plain collection account, the bank will collect the payment, but will bear no responsibility for the Deed of Reconveyance.

Whether you use bank or seller financing, you should plan to submit a credit report and financial statement to your lender.

J.Personal Property

If you plan to purchase household and furniture items from the seller, we suggest that you do not roll the price into your offer to purchase the home. Instead, develop an inventory list signed by you and the seller and have a Bill of Sale prepared for the furniture items.

With an inventory list in hand, it’s better business to pay for those items after the sale of the home has closed and you have inspected the premises for the items you are buying.

Only if there is a future tax advantage is it recommended to include personal property in the sale price of the house.

K.Zoning

In 1970, the State of Oregon incorporated the Land Conservation Development Commission (LCDC). Its purpose is twofold: (a) to protect Oregon’s trees; and (b) to minimize urban sprawl. The only land exempt from LCDC control is found within city limits and the city’s designated growth boundaries, known as the Urban Growth Boundary or UGB.

All land outside of the Urban Growth Boundaries falls under the jurisdiction of LCDC and while the county planner’s function is to preview development of all property, all development must meet LCDC requirements.

All prospective purchasers have an obligation to determine the zoning of the land they are purchasing and regional restrictions that may apply to its use and development, particularly resource property such as forest grazing or farm use. All Oregon contracts and deeds state that a buyer has an obligation to contact the city or county planning departments to determine the use of the property.

L.CC&Rs and Homeowners Associations

Many subdivisions do not have an interest in any of the real property. These subdivisions only have CC&Rs (Conditions, Covenants and Restrictions). Buyers are encouraged to review the CC&Rs in detail. Generally, CC&Rs are for the benefit of the property owner and property values.

Developments having homeowners associations have CC&Rs, by-laws, income, expenses, assets and liabilities. Both the directors and the members should have liability insurance. The association should be solvent. There should also be a fund for future as well as emergency expenses.

If a buyer is purchasing within a subdivision or Planned Unit Development (PUD) that has a homeowners association, we strongly recommend you request and read in detail copies of the CC&Rs, articles of incorporation, by-laws, financial statement (including treasurer’s report), minutes from the last annual meeting and minutes from the last two association board meetings.

Buyers should find the reports and conditions satisfactory to their needs.

M.Building Costs and Moratoriums

Because of the mild climate and beauty, the southern Oregon coast is very appealing to the retirement community. As a result, Curry County is one of Oregon’s fastest growing counties.

Growth creates problems. The problems include sewage disposal, storm drainage, water and roads.

In the past ten years, all three of our cities in Curry County have experienced some type of a moratorium that, for a period of time, restricted building. If the property you are purchasing is within a city or UGB of a city and requires development, you should talk with the City Administrator and become educated on the city’s growth problems and how these problems could affect the development of your property.

Also, if you are buying within the city limits or UGB of one of the three cities (Brookings/Harbor, Gold Beach and Port Orford), you should inquire about connecting and hook-up fees for utilities. These fees generally include funds for future growth and replacement costs.

N.Local Improvement Districts

It’s important that cities plan their future infrastructure.

Good control can be maintained when new development is being planned. Problems are more apt to exist in older parts of town where streets have eroded and sidewalks, curbs and storm drains do not exist or are inadequate.

In order to solve these problems, Curry County employs the Local Improvement District concept, known as L.I.D. That is, areas needing improvements are referred to as local improvement districts. Property owners in a district vote whether or not they want to fund the cost of improving their area. If more property owners vote “no” than “yes,” plans for improvement are cancelled and that local improvement district is abandoned.

If the majority of property owners vote “yes,” then improvements are made and each property owner is assessed a fair share of the cost.

The cost of the improvements is normally financed by a low interest Bancroft loan as a lien against each property and each property owner pays semi-annual payments (twice a year) to the city. Payments for the improvements are normally spread over a 20-year period.

New property owners within the City of Brookings or the UGB may be required to sign a Deferred Improvement Agreement when the property owner signs up for city water and sewer service. By signing the Deferred Improvement Agreement, the new property owner is agreeing that he or she will not cast a “no” vote if and when a local improvement district is formed. This assures the city that, in time, all roads, sidewalks and storm drains can be repaired or brought up to better standards.

O.Resource Land

Land in Oregon designated for resource use such as agriculture, farm, grazing or timber does not permit the outright building of a home. The building of a home on resource land such as F/G (forest/grazing) or EFU (exclusive farm use) requires a “conditional use permit”. You must consult with the planning department when purchasing resource land to build on. The planning department will require detailed information before approving a building permit. The owner may have to justify density, the number of existing residences within a given area known as the grid, the source and quantity of water, sewer or septic, utilities, fire protection, access and the geology if the building site is within a geological hazard area or on a steep slope hillside. If the building site is in a geological hazard area or a designated steep slope hillside, a geological conditional use permit will also be required. It is best to hire a certified engineering geologist to select a building site and plan the structure’s foundation.

P.Conditional Use Permits

Conditional use permits are required when planning to develop or build a home on property zoned Forest/Grazing (F/G) or Exclusive Farm Use (EFU) and in designated hazard areas and velocity zones. For hazard areas, ask to see the appropriate geologic hazard map. For designated steep slope hillsides contact the Curry County Planning Department in Gold Beach. Hillsides needing special permits to build on are those hillsides that the county has designated as having potential for movement and slides. Velocity zones are those areas in designated flood planes by the National Flood Insurance Program. Land located in Zones A and B are within the 100- and 500-year flood plane. Land in Zone C is considered minimal flood hazard or outside the flood plane altogether. Velocity zones are located along rivers and ocean inlets. Permits for homes built in velocity zones normally require “break away” foundations and floor joists that are above the high water line.

Q.Vesting

Buyers are always encouraged to seek counsel when buying property in Oregon, particularly unmarried couples who want to share a common ownership with or without rights of survivorship.

Tenants in Common can create a number of problems including financial problems if one owner should need an equity loan secured by the property since all parties claiming ownership need to sign the loan papers. Survivorship is also an issue since tenants in common does not allow survivorship.

Married couples may want to vest their interest as Tenants in Common for the benefit of their heirs.

Buyers are always encouraged to consult an attorney regarding vesting.

R.Mediation / Arbitration

Beginning in 1990, the Oregon Association of Realtors started encouraging parties to use mediation and arbitration for dispute resolution. When entering into a sales agreement, all parties can agree to settle disputes by mediation or arbitration rather than by court litigation. The use of mediation and arbitration is also encouraged by the Dispute Resolution Commission (established by the Oregon Legislature). Buyers and sellers can also agree that claims of $5,000 or less (ORS 46.405) shall be resolved in Small Claims Court.

Mediation: In mediation, the parties attempt to “resolve” their dispute with the assistance of a neutral third person. The neutral person (the mediator) is trained and skilled in helping people settle their own disputes. Any party can terminate the mediation process at any time for any reason. The dispute is resolved only if the parties themselves reach a satisfactory agreement. The parties share in paying the fee of the mediator. The mediation process will settle many disputes privately and quickly.

Arbitration: In arbitration, the parties choose an impartial third person (usually a real estate law attorney) to hear the dispute. The arbitration procedure takes the place of formal court litigation. The parties are bound by the arbitrator’s decision. Caution: unlike litigation, there is no appeal process under arbitration. The arbitrator’s decision (or “award”) is final and filed with the court clerk for confirmation as a judgment of the court. The claimant (the party who began the arbitration process) pays the arbitration filing fee. The parties share in paying the arbitrator’s fee.

Because arbitration awards are final, it is the recom­men­dation of our company that our customers strongly consider their choices and consult legal assistance if necessary.

Thank you for reading this manual. If you have any questions, please do not hesitate to ask them.

It is important to us that your move to Oregon is rewarding and happy. We feel that your move to Oregon will be happier and more rewarding if we take the time to inform you about our area.

I have received, read and understand the information in this “Buyer’s Guide to a Happy Investment,” and I understand that RE/MAX Coast and Country is an independently owned and operated franchisee of RE/MAX International Corporation.

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I certify that I have provided the prospective Purchaser named above with a copy of this “Buyer’s Guide to a Happy Investment.”